Finance Gap Insurance is a very basic and simple level of gap insurance to understand.
Simply put, if your vehicle is written off, all outstanding finance will be cleared.
This means that you can walk away with no further liability. Easy! The down side is, however, that you are also walking away from any deposit you have paid and any equity that you have generated while making your payments.
In fact if you paid for your vehicle on any other form of finance except contract hire or operational lease where you have no option no matter what at the end of the finance agreement and you have to hand your vehicle back then you may wish to consider other forms of Gap Insurance such as Vehicle Replacement or Return to Invoice Insurance.
Unbeknownst to a lot of people, your motor insurance only award you with the amount of money your car is worth on the day it is written off or stolen and due to depreciation, this is likely to be a significant amount less than your car was originally worth. Therefore, if you found yourself to be involved in an accident or your car was stolen and then declared a total loss, you could find yourself with a rather significant amount of money to find on your own to repay your finance company. This is where Gap Insurance comes in.
Lets look at an example of Finance Gap Insurance and how it would work for you?
Lets say that you acquired a Kia Ceed which had an original retail value of £14,395, you acquired your car on finance and spread this over four years.
Lets imagine that three years into your finance agreement you are unfortunately involved in an accident in which your motor insurance decides to write your vehicle off.
Although you may not believe it, your car has now depreciated to £5,650, this is a significant amount less than your car was originally worth and this is the amount that would be paid to your finance company by your motor insurer.
This could leave you in a rather financially straining situation, with no vehicle and having to find the remaining outstanding balance that is owed to your finance company on your own. Finance Gap Insurance would top up this motor insurance valuation, with the amount necessary to equal what is still owed to your finance company.
This leaves you in the same position as before, without the financial strain on your shoulders and left to focus on the more important things like getting better or gaining your confidence back after an accident, or looking around for a new car. Do not leave yourself exposed, it could be the difference between an extremely significant amount of money which could have dire financial consequences.
With finance gap insurance from as little as £39.00 inclusive of IPT is it really a risk you are happy to take?
Just because you have house insurance does not mean that your house will not be broken into. Instead House Insurance just like Gap Insurance protects you the only way insurance can, financially.
With respect to Finance Gap Insurance will simply ensure that should the worst happen, you are not left having to fund or pay for a vehicle you no longer have.
What are the chances or your vehicle being written off? Did you know that an estimated 600,000 vehicles are written off in the UK each year?
Did you know that over 83% of vehicles now stolen are done so with the use of the keys?
Did you know that you own insurance company are only obliged to offer you what your vehicle is worth on the day it was written off, not the amount you paid or have outstanding on finance.
Did you know that the average vehicle is estimated to lose up to 50% of its original value within a three year period.
An estimated 370,000 cars are stolen each year in the UK, which has the highest (per capita) number of stolen cars in Europe.
It is estimated that some 70 per cent of stolen cars are broken up and sold for spares, while the rest are given a false identity and sold (many are exported to the Middle and Far East).
The statistics and facts go on and on. However, Gap Insurance is not a legal requirement in the UK and as always is your choice. After all with cover from as little as £39.00 per year if you have no protection it is you who will have to cope with any financial ramifications.
It is available from one to five years with claim limits of £5,000 to £25,000.
Your finance has to be agreement which is linked to your vehicle so bank loans and other forms of finance may be excluded. If need any clarification why not simply call a member of the team on 0800 195 4926.
Please remember that for us our sole priority will always your policy terms , conditions and what happens when you need to make a claim. We believe that gap insurance should be as easy to buy as it is to make a claim which we think is the only true real test of any policy.
That said we totally understand that price is an important factor for anyone.
We monitor the market to make sure that the price you are quoted is amongst the lowest if not the lowest in the UK however in the unlike event that you do find a cheaper quotation we simply guarantee to beat it!
Your vehicle also has to be listed in UK supplied vehicle which is listed in Glass's guide for a full listed of policy terms and conditions please see your full policy documents.
Please remember that this is an amount over and above your vehicle valuation and that you are simply protecting a shortfall amount.
In most cases, excluding contract hire gap insurance this will mean that you will not need as big a claim limit as say return to invoice. This is because you are simply protecting the difference between your vehicles valuation and the amount outstanding on finance.
Please also remember that as feature rich as are policies are they will not be able to cover any negative equity that you have carried forward from an old finance agreement. they will also not be able to cover any late payment fees or arrears.
You will not be charged for the change of a name, address or registration number on any Shortfall policy.
Shortfall policies will pay £750 towards the cost of your own motor insurance excess.
All Shortfall policies are backed by the Financial Services Compensation Scheme.
You can transfer your policy at any time to another eligible vehicle, completely free of charge.
All Factory fitted options are covered.
We do not limit the purchase price of your vehicle to a percentage of any guide price.
We do not have a market value clause on settlement.
Our customer service call centre is completely UK based.
Our claims team are UK based.
With every Shortfall policy, you have a 30 day cooling off period, during which you can cancel and providing that you have not made a claim, will be issued with a full refund.
You are able to cancel at any time and receive a pro rata refund less a nominal administration fee that is charged by the underwriter.
Finance gap insurance is a very simple and inexpensive form of gap insurance. This means that you can buy a finance gap insurance from as little £39.00 per year.
This can be up to 90% less than your main dealership may have quoted. Does this result in a dilution of cover?
The point blank answer is absolutely no, cheaper prices do not result in poor levels of cover!
In fact the are very real and tangible reasons that your local dealership will never and can never be as competitively prices as on-line gap insurance suppliers ourselves included and they are nothing to do with customer service, claims handling or longevity. Instead fluctuations of insurance premium tax and supplier rates means that on-line suppliers will always be more competitive.
What does negative equity mean?
Negative equity means that you owe more on your vehicle than you have outstanding on finance and this is exactly what finance gap insurance protects.
Simply put it means that if your vehicle is written off you can walk away with no further liability. You will notice that in our policies it will mention that it will not cover negative equity, and we know thorough experience that some policy holders can be confused. When negative equity is referenced in our policies it does not mean that it will not protect your current vehicle against you having your vehicle written off and any negative equity you may be in at the time.
Instead with our finance gap insurance policies it simply means that it can only protect negative equity relating to this vehicle and can not cover any negative equity that you have carried forward form and old agreement.
What is a finance market value clause?
A market value clause is a form of policy that restricts your policy to a percentage of a guide price. Thankfully this is not something that you need to be concerned about. As if you buy a Shortfall Finance Gap insurance policy we have no form of a market value clause.
If fact providing that you do not accept a settlement from your own insurance company before our claims team are involved our policy will pay the difference between your vehicles valuation and the amount outstanding on your hire purchase. lease or contract hire agreement (excluding late payment fees and arrears).
Finance Gap Insurance as it should be, easy, simply and real value for money.